For your business5 min read

How to price your services as a self-employed person

Most self-employed service providers undercharge — not because they lack skill, but because pricing is emotionally difficult and the maths is rarely taught. Here's the framework.

Step-by-step

Calculate your minimum viable rate first

Before setting any price, work out what you need to earn. Add up: your fixed costs (insurance, tools, vehicle, software, website), your variable costs (materials, travel), and your personal financial needs (rent, food, savings). Divide the total by the number of hours you can actually bill per month — not your working hours, but your billable hours. For most sole traders, billable hours are 50–60% of working hours once you account for admin, quotes, travel, and marketing. This is your floor: the rate below which you lose money.

Research what others charge — then don't just match it

Look at what competitors charge in your area for similar work. Check trade directories, their websites, and ask in professional groups. This tells you the market rate. But market rate is an average — it includes inexperienced people undercharging and established people commanding a premium. Where you position depends on your experience, quality, specialisation, and how full your books are. If you're consistently getting every enquiry, you're probably undercharging. If you never get pushback on price, you're definitely undercharging.

Price the outcome, not your time

Charging hourly puts a ceiling on your earnings and penalises efficiency. As you get faster and better at your work, your hourly rate effectively drops even as the value you deliver increases. Where possible, price the job or the outcome: a full garden redesign, a day's painting, a complete website, a term of tutoring. The client pays for the result, not for watching you work. Project pricing also makes your income more predictable and avoids conversations about whether a job took longer than expected.

Don't forget what the taxman takes

If you're self-employed in the UK, budget to keep 25–30% of your income for tax and National Insurance. This means a rate that sounds good isn't actually your take-home. A £30/hour rate is approximately £22–£23 take-home before business costs. Factor this in when setting your rate — many new sole traders set a rate that covers their expenses but doesn't account for their tax bill, then face a surprise at the end of the year.

Raise your prices systematically as demand increases

Your prices should go up over time. If your books are 80%+ full for more than a few months, you're undercharging — you're losing income and turning away higher-value work to fill your time with lower-value work. Raising prices for new clients is straightforward. For existing clients, give advance notice (a month for regular clients) and frame it as an annual review: 'I'm adjusting my rates from [date] to reflect increased costs and demand.' Most loyal clients expect and accept this. Some leave — those slots fill with new clients at the higher rate.

Communicate your value, not just your price

Price confidence comes from being able to explain what makes your service worth the cost. If a client says 'that's more than the last person quoted', the answer isn't to drop your price — it's to explain your qualifications, your reliability, your process, and what's included. A website, professional photos, reviews, and clear service descriptions all build the perceived value that justifies your rate before a client even asks.

Tips & best practices

▸A simple test: quote your real price on the next 10 enquiries. If you convert 8–10 out of 10, you're too cheap. If you convert 0–2, you're too expensive (or targeting the wrong clients). 4–6 out of 10 is roughly right.
▸Packages work better than hourly rates for most service businesses. 'Three-session package — £120' converts better than '£45 per session' because it implies commitment and makes comparison harder.
▸Discounting cheapens your work and teaches clients that your prices are negotiable. If you want to offer a first-time discount, build it into a 'new client' package price rather than discounting your stated rate.

Common questions

Should I put my prices on my website?

Yes, or at minimum a starting price or price range. Hiding prices forces potential clients to contact you before they know if they can afford you — wasting both their time and yours. Transparent pricing builds trust and pre-qualifies enquiries.

How do I handle a client who says 'that's too expensive'?

Don't immediately discount. Ask what they're looking for in terms of budget, and see if there's a smaller scope of work that fits. Sometimes the objection is about value uncertainty rather than price — explaining what's included and what makes your service worth it can convert the enquiry without reducing price.

How often should I raise my prices?

Once a year is the expectation in most service industries, aligned with inflation and cost increases. Significant raises (20%+) are easier to communicate as being after a qualification, after a significant increase in demand, or after a defined period of time.